What the Bank of Canada's Latest Rate Cut Means for Your Mortgage
October 2025 Update
If you've been following financial news, you may have heard that the Bank of Canada lowered its overnight rate by 0.25% to 2.25% on October 29, 2025. Here's what's behind the move — and what it means for your mortgage and financial strategy.
Why the Bank of Canada Made This Move
After several years of higher interest rates, the Bank is easing slightly to support the economy. Here are the key factors behind the decision:
Economic growth has slowed. Canada's GDP contracted by 1.6% in Q2 2025 as exports and business investment weakened.
Employment is softening. The unemployment rate remains at 7.1%, with hiring slowing across most sectors. This signals a cooling labour market.
Inflation is near target. Headline inflation is 2.4%, with core measures around 2.5% — right in line with the Bank's goal. That gives policymakers more flexibility to support growth.
Global headwinds are weighing on confidence. Trade disruptions, U.S. policy uncertainty, and slower global demand have made Canadian businesses cautious about investing and expanding.
In short, the Bank is offering a modest dose of support — easing financial pressure on households and helping stabilize growth while keeping inflation in check.
What This Means for Variable-Rate Borrowers
If your mortgage or line of credit is tied to a variable rate, this decision is likely welcome news. Here's what to expect:
Your lender's prime rate should decrease, reducing your borrowing cost
If your payments fluctuate, your monthly payment may drop slightly
If you're on a fixed payment, more of your payment will now go toward principal — helping you build equity faster
Most lenders take a few days to adjust rates, so the change may appear on your next statement
Catherine's Advice
This rate cut is a great opportunity to revisit your mortgage strategy and ensure it aligns with your current goals and life stage. Here are my top tips right now:
Keep your payments constant. Even though rates have dropped, keeping your payments the same means more of your money goes toward principal — accelerating your mortgage paydown without affecting your budget.
Consider locking in while fixed rates are favourable. Many lenders now offer fixed rates near or below 4%. If you value stability, are budgeting for upcoming life changes, or simply prefer predictable payments, this could be an ideal moment to explore fixed options.
Review your budget and upcoming costs. Whether you're planning a renovation, expanding your family, or investing in new opportunities, take a moment to review your spending and cash flow. A small rate shift can create meaningful space to advance your priorities.
Think big picture. Your mortgage should serve your broader financial and lifestyle goals — not the other way around. Let's make sure your plan still reflects your next chapter and supports your vision for freedom, stability, and growth.
Let's Connect
Every situation is unique, and personalized advice makes all the difference. If you'd like to review how this rate cut affects your mortgage — or explore your options between fixed and variable — I'm here to help.
Send me a quick note or book a time that works for you. Together, we'll ensure your mortgage continues to evolve with your life and goals.
Related Posts
The Bank of Canada lowered its overnight rate to 2.25% on October 29, 2025. Here's what's driving the decision and how it affects your mortgage strategy — whether you're on a variable rate or considering locking in.